[4] This act gave management of prisoners, parolees and offenders on probation to the Department of Corrections while leaving administration of the court system and fines collection[5] with the Ministry of Justice.

The intention was to enable the new department to improve public safety and assist in the rehabilitation and reintegration of offenders.

Between 1997 and 2011 the number of inmates increased by 70%[7] and, at 201 prisoners per 100,000 of population (in 2018), New Zealand has one of the higher rates of imprisonment in the Western world.

[10] When National came to power in 2008, the department built a new 1,000 bed prison at Mt Eden for $218 million[11] in a public private partnership and gave the contract to Serco.

The new chief executive of the department, Mark Byers, introduced a $40 million scheme designed to reduce reoffending called Integrated Offender Management System (IOMS).

Seven years later, Greg Newbold said the scheme was an expensive failure and described it as "another wreck on the scrapheap of abandoned fads of criminal rehabilitation.

[31] Since then successive governments have responded by establishing additional Drug Treatment Units (DTU's) within the prison system.

Between 2000 and 2006 over 10,000 offenders were required to attend this programme until an evaluation found it appeared to increase the likelihood of re-offending rather than reducing it.

[38] Five years later, the Department's Annual report for 2018 shows its 17 prison based rehabilitation programmes reduced reoffending by an average of only 5.5%.

In 2004, the Labour government, opposed to privatisation, amended the law to prohibit the extension of private prison contracts.

[45] On 24 July 2015, Serco's contract to run the Mount Eden prison was revoked due to numerous scandals and operation was given back to the New Zealand Department of Corrections.

[52] As of May 2012 the newly appointed chief executive, Ray Smith proposed merging the three service arms into one team.

[53] Smith said the segregated infrastructure "creates replication of work, is inefficient and has resulted in an overly layered structure."

Mark Byers was chief executive of the Department of Corrections for its first ten years, until he retired from the public service in 2005.

Byers oversaw a range of organisational initiatives in his time at the helm and, in 2000, introduced a new computer system called "Integrated Offender Management".

He served as chief executive of Corrections for five years from 2005 to 2010 and, in a farewell interview, listed his top three achievements as the implementation of cell phone blocking technology in prisons, better enforcement by the Probation Service of sentence compliance, and the establishment of the Professional Standards Unit to investigate corruption by prison officers.

Simon Power, opposition spokesman for justice from 2006 through to 2008, made a number of calls for an inquiry into Corrections,[56] but none was held.

In 2009 Matthews' leadership was questioned by the new Corrections Minister, Judith Collins, after a run of bad publicity that included the murder of 17-year-old Liam Ashley in a prison van;[57] the murder of Karl Kuchenbecker by Graeme Burton six months after he was released on parole;[58] and the Auditor General's critical report on the Probation Service's management of parolees.

[60] After the Auditor General's report was released in 2009, Collins refused to express confidence in Matthews and media commentators expected him to resign.

[citation needed] A study in 2015 found that about 90% of prisoners had been diagnosed with a mental health or substance abuse disorder during their lifetime.

[67] The 'Health in Justice' Report conducted in 2010 by the Ministry of Health found 52% of prisoners had a history of psychotic, mood, or anxiety disorders.